What is foreign exchange?
Foreign exchange is a term used to refer to the means used in international transactions, including:
Foreign currency: Foreign currency is a foreign currency or common currency of a group of countries.
Instrument of payment in foreign currency: This is a payment instrument recorded in foreign currency such as: check (cheque), bill of exchange (Bill of Exchange), promissory note (promissory note), bank card (Card Bank), transfer paper (Transfer)
Documents valued in foreign currencies such as: Government bonds (Government Bonds), corporate bonds (Corporate Bonds), stocks (Stock).
Gold (Gold): Including gold belonging to the state reserve, gold on resident's foreign account, block gold, bullion, gold bar.
National currency - local currency, the national currency is considered foreign exchange if that currency is used in international payments, or is transferred in and out (import and export) out of the country.
Cryptocurrencies: Currencies backed by the processing power of a global network of computers instead of governments. For example: Bitcoin, Ethereum...
What is forex trading?
Foreign exchange transaction is the exchange of foreign exchange/foreign currency also known as FOREX or FX or spot FX is the purchase, sale and exchange of foreign currency goods and valuable papers in foreign currencies on the international market. economy, and this is the largest financial market in the world, with a daily trading volume of 5.3 trillion USD per day.
What is the foreign exchange market?
The foreign exchange market (Forex, FX, or currency market) is a global decentralized market for the exchange of currencies. The main players in this market are the major international banks.
Financial centers around the world function as anchors of exchange between a wide range of different types of buyers and sellers around the clock, except on weekends. EBS and Reuters' dealing 3000 are the two main interbank FX exchange platforms. The foreign exchange market determines the relative value of different currencies.
If you compare it with the New York Stock Exchange, which trades $25 billion a day, you can imagine how huge this market is. Compared to the stock market, Forex has a much larger scale, so forex trading is extremely liquid, can enter or close orders immediately, unlike securities with limited trading time. and can't always match orders.
In a foreign exchange transaction, one currency is sold in exchange for another. An exchange rate represents the relative value between two currencies. The currency is usually identified by the three-digit "Swift" code. For example, EUR = Euro, USD = US Dollar, CHF = Swiss Franc and so on.
What you need to know about the forex market
Objects traded on the foreign exchange market
Previously, only large financial institutions and high net worth individuals could access the money markets. However, in recent years, thanks to the application of technology, many customers can buy and sell currencies from anywhere using a modern, safe and secure online trading platform.
Some of the main customers participating in this market include:
Government and Central Bank
The governments of major countries and their central banks including the Federal Reserve, the Bank of England and the European Central Bank are the largest participants in the foreign exchange market. .
Big bank
Some of the world's largest banks such as Goldman Sachs, Deutsche Bank and Citibank trade huge volumes of currency in the foreign exchange market on a daily basis, both for the banks themselves and for their clients including corporations. large, government agencies and high net worth individuals.
Forex Broker
Forex brokers provide access to the global currency markets to retail investors of all sizes through online trading platforms.
Retail investors
According to statistics, about a third of the daily trading volume in the forex market is now done by retail investors. That proves individuals are trading approximately $1.5 trillion in currencies daily, having access to the forex market through trading platforms provided by forex brokers.